The Fed Sets Its Sights on $1.8 Trillion in "Shadow Credit": Dallas and New York Fed Join Forces to Launch First-Ever Private Credit Survey

Note that two U.S. regional Federal Reserve banks hope to examine how lending standards are evolving in the fast-growing private credit industry through a new survey launched on Monday. According to a statement, the survey, jointly conducted by the Dallas Fed and the New York Fed, will "provide insight into credit availability, credit extension, the evolution of lending standards in the private credit market, and implications for the broader economy and monetary policy." The survey will also assess trends in loan documentation, borrower demand, and new loan approvals in the third quarter. After a turbulent year, the $1.8 trillion private credit industry is coming under stricter scrutiny, with portfolio transparency becoming a central concern for regulators and investors. In September, the U.S. Securities and Exchange Commission (SEC) issued an "important reminder" regarding managers' existing private asset valuation requirements, calling on managers to strengthen monitoring and on auditors to maintain "professional skepticism." According to the Dallas Fed, the survey will set out a series of eligibility thresholds applicable to institutions typically active in the U.S. private credit direct lending market. Lenders must meet a threshold of $50 million in total assets under management dedicated to direct lendingso-called direct lending refers to private debt financing extended directly to below-investment-grade companies. Within this scope, direct lending covers loan structures such as term loans, delayed draw and revolving credit facilities, but excludes instruments that typically fall outside the business scope of direct lenders, such as broadly syndicated loans and high-yield bonds. Notably, the survey splits questions based on how managers are affected differently in lending to small, medium and large companies, using borrowers' EBITDA as the dividing basis, with ranges from below $30 million to above $100 million. The statement said the survey's findings will not be used for regulatory purposes and are expected to be published in the first quarter of 2027, reflecting the two regional Feds' ongoing work to gather market intelligence.